None
HR
When Banking Becomes Geopolitics: The Correspondent Banking Crisis Threatening the Palestinian Economy
[]
IndraStra Global
According to recent media reports, the Palestinian economy is facing a systemic shock triggered by the impending severance of correspondent banking relationships between major Israeli financial institutions and Palestinian banks.
For Palestinian banks, this infrastructure is uniquely constrained by the Paris Economic Protocol.
In 2025 alone, Israeli correspondent banks processed approximately 51 billion shekels in transactions for the Palestinian financial sector.
The liquidity crisis is already acute; an estimated 18 billion shekels, equivalent to nearly six billion US dollars, currently sits idle in Palestinian bank vaults.
This physical cash accumulation results from the inability to electronically repatriate surplus banknotes to the Israeli banking system.